5/09/2011 @ 12:00PM

Alkermes Reels In Elan's Drug Technology Business

Alkermes
said Monday it has made an agreement with
Elan Corporation
to acquire its drug formulation and manufacturing business in a cash and stock transaction valued at $960 million.

The two entities will merge under a new holding company, incorporated in Ireland, under the name
Alkermes
.

The merger accelerates Alkermes plan to build a sustainable profitable biopharmaceutical company with expertise in central nervous system diseases as well as a broad, diversified portfolio of products, science and technologies.

The combined company is expected to have growing product, royalty and manufacturing revenues in excess of $450 million annually, Alkermes said. The transaction is expected to be immediately accretive to cash earnings.

For
Elan
, the divestiture enables the company to reduce its debt and improve its capital structure to increase operating leverage, and allows for additional focus on opportunities within the neurology space.

The transaction has been approved by the board of both companies. Elan will receive $500 million in cash and 31.9 million Alkermes shares.